ABC BUILDWARES INDIA (P) LIMITED,PARIYARAM V. PR. CIT CENTRAL, , KOCHI

ITA 373/COCH/2024

AI Insights

The case involves two appeals by ABC Buildwares India (P) Ltd. against the orders of the Principal Commissioner of Income-tax, Central, Kochi, concerning different assessment years (2015-2016 and 2017-2018). The primary contention in the 2015-2016 assessment was the invocation of section 263 by the PCIT after the completion of assessment under section 153A, which the assessee argued was without proper jurisdiction as the necessary approval from the JCIT was not shown to be mechanical. In the 2017-2018 assessment, the issue revolved around the addition of VAT on closing stock without corresponding adjustments to purchases, sales, and opening stock, contrary to the provisions of section 145A. The Tribunal's decision emphasized the need for adherence to procedural fairness and statutory requirements in tax assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396416 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: CIT(E) v. Love in Action Society (2022) 442 ITR 358 (Ker.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDARASAN S
• Assessee Lawyers: ARUN RAJ S
• Keywords: Set aside; Principle of natural justice; Assessment record
• Section: 11

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member & Shri Prakash Chand Yadav, Judicial Member ITA No.373/Coch/2024 : Asst.Year 2015-2016 ITA No.389/Coch/2024 : Asst.Year 2017-2018 ABC Buildwares India (P) Ltd. Pariyaram Kannur – 670 502. PAN : AALCA5971A. v. The Principal Commissioner of Income- tax, Central, Kochi. (Appellant) (Respondent) Appellant by : Sri.Arun Raj S, Advocate Respondent by : Sri.Sundarasan S, CIT-DR Date of Hearing : 22.05.2025. Date of Pronouncement : 26.05.2025 O R D E R Per Prakash Chand Yadav, JM : Both these appeals relating to same assessee, however, pertain to different assessment years are decided by way of this consolidated order for the sake of convenience. ITA No.373/Coch/2024 : Asst.Year 2015-2016 2. The brief facts of the case as coming out from the orders of the authorities below are that the assessee is a company served by the department on 27th February, 2020. Thereafter, the case of the assessee was assed u/s.153A of the Income-tax Act, 1961 and addition of Rs.2.56 crore has been made to the returned income of the assessee. Against which the assessee filed an appeal before the CIT(A). Thereafter the PCIT called for ITA Nos.373 & 389/Coch/2024. ABC Buildwares India (Pvt.) Ltd. 2 assessment records and after examining the records, took a view that the order of the A.O. is erroneous insofar as prejudicial to the interest of revenue. Accordingly, the PCIT set aside the order of the A.O. and directed the AO to assess the income of the assessee after considering the observations made by the PCIT in its order. 3. Aggrieved with the order of the PCIT, the assessee has come up in appeal before us. The learned Counsel for the assessee inter alia argued that it is a case where sec.263 has been invoked after the completion of assessment u/s.153A of the Act. It is the contention of the learned Counsel for the assessee that in cases where assessments are completed u/s.153A of the Act, an approval from the JCIT has to be obtained by the concerned AO, and unless and until it is shown that the said approval was not mechanical, the PCIT cannot have any jurisdiction to exercise his power of review u/s.263 of the Act. When the Bench asked the learned Counsel for the assessee as to whether the assessee has appeared before the PCIT in review proceedings, the Counsel for the assessee pointed out that the assessee could not appear before the PCIT. 4. The learned CIT-DR relied upon the orders of the authorities below. 5. We have heard the rival submissions and perused the material available on recorded. In ground No.3 before us, the assessee has contested the order of the PCIT on the ground the ITA Nos.373 & 389/Coch/2024. ABC Buildwares India (Pvt.) Ltd. 3 PCIT has violated the principle of natural justice. In such cases, the only recourse is to restore the matter to the file of the PCIT for examining the issue as held by the Hon’ble jurisdictional High Court in the case of CIT(E) v. Love in Action Society reported in (2022) 442 ITR 358 (Ker.). Respectfully following the verdict of the Hon’ble jurisdictional High Court, cited supra, we restore this matter to the file of the PCIT and give liberty to the assessee for raising all its legal contentions before the PCIT. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. ITA No.389/Coch/2024 : Asst.Year 2017-2018 7. In this year the solitary issue is regarding the action of AO against the addition of VAT on closing stock without increasing the value of purchases, sales and opening stock of goods as provided in clause 11 of section 145. 8. Ld counsel for the assessee has relied on the provisions of section 145A and the provisions of AS-2 as issued by ICAI. 9. Ld DR relied on the orders of the AO and CIT(A) 10. After considering the rival submissions we are of the view that is the settled position of law that ITA Nos.373 & 389/Coch/2024. ABC Buildwares India (Pvt.) Ltd. 4 corresponding adjustments to be made to the purchase, sales and opening stock, in terms of the provisions of section 145A. Therefore the AO is directed to provide the same. 11. Appeal filed by the assessee is allowed as indicated above. Order pronounced on this 26th day of May, 2025. Sd/- (Inturi Rama Rao) Sd/- (Prakash Chand Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 26th May, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "